Forget-me-not Social Security
One other point on the VP debate, beyond Paul Ryan’s disturbing call for a theocracy, is that Social Security is not going broke. No matter how many times the beltway press claims it is, no matter how many times the political party that wants to privatize Social Security claims it, no matter how many times the other party which isn’t that enthusiastic a supporter of social welfare agrees: Social Security isn’t about to go broke. It just isn’t.
But it’s domestic policy where Raddatz, like Lehrer, blew it. She started by asking about unemployment, which is at least a gesture at the enormous suffering in the country right now. That set off minutes and minutes of rambling, all of which was boilerplate (though the stuff on the green stimulus was interesting, mostly because Ryan lied his ass off).
Then it was straight to “entitlements,” which, in case you weren’t aware of the Beltway CW, Raddatz introduced by saying, “Both Medicare and Social Security are going broke.” That is just absolutely, empirically false. Medicare is fine out to 2024 and easily fixable after that (it’s medical costs, not Medicare, that are the real problem). And Social Security quite literally cannot go broke. It too can be kept solvent for many decades with small tweaks. Neither is a problem until a decade from now.
Of all the requirements for a debate moderators, surely the very minimum is that he or she not introduce factual errors into the discussion. No?
And then it was on to taxes and the defense budget. I kept thinking, “This is exactly the stuff we went over the other night in the presidential debate! Where are immigration, education, innovation, housing, LGBT issues? Where is energy? Where is, God forbid, climate change?”
(click here to continue reading Questions at VP debate reveal bankrupt Beltway thinking | Grist.)
In honor of Tax Day
more on the fallacy from John Harvey, of Forbes, no less:
It is a logical impossibility for Social Security to go bankrupt. We can voluntarily choose to suspend or eliminate the program, but it could never fail because it “ran out of money.” This belief is the result of a common error: conceptualizing Social Security from the micro (individual) rather than the macro (economy-wide) perspective. It’s not a pension fund into which you put your money when you are young and from which you draw when you are old. It’s an immediate transfer from workers today to retirees today. That’s what it has always been and that’s what it has to be–there is no other possible way for it to work.
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The most obvious and straightforward means is this: set a tax of 30% on the salaries of existing workers and give it directly to the retirees–right now, today, immediately. Have the money come straight out of your paycheck and right into your grandmother’s bank account. This accomplishes the goal neatly and directly–and it’s exactly what we do in real life. This is how Social Security actually operates. As you can see, this needs no prior financing or savings, nor would that appear to be particularly helpful. At the national level, maintaining a class of retirees (whether via Social Security or private pensions) means redistributing existing output, not putting money under your mattress. Although you can run out of money for retirement, we, as a nation, cannot.
What, then, you may ask, is the Social Security Trust Fund, the pool of money that people say will dry up and make it impossible for anyone to receive their Social Security payments? It is the surplus that resulted from having collected more in taxes than was necessary to pay out to retirees. Let me say that again: it is how much existing workers were overtaxed relative to the need to pay retirees in the past. It was never the source of the money we’ve been paying to Social Security recipients all these years. Strictly speaking, it’s completely unnecessary if we are able to precisely and continuously match tax revenues and pay outs.
(click here to continue reading Why Social Security Cannot Go Bankrupt – Forbes.)
Spare Change
Too bad this simple point is not repeated often by those who should know better. In fact, the only politician who I’ve heard correct this error forcefully has been Bernie Sanders, and he isn’t a Democrat or Republican…